With a 95 - 98 upgrade your just asking for trouble, however if you still do not want to format:

BACKUP EVERYTHING YOU CAN!!! I can't emphasis this enough. Just get every possible thing you can, you could very well need it later.

Pop in the 98 disk and it should say something along the lines of 'This disk contains a newer version operating system, would you like to install?'. Even though you have the full install disk, it is still capable of an upgrade installation. Select ok and the 98 setup will start.

Should it at any point ask you to format or anything along those lines, stop. You may have either selected something wrong or the installation is trying to convert your filing system to FAT32 from FAT16. Under 98 this requires a full format. It shouldn't do this but I'm just warning you.

I will warn you again that even if you pull through the setup fine and all your hardware still works, you may find that some of the programs that you had to have won't work. This is the nature of a migrated installation. Things go wrong. Hence why you backed up everything you could.

Of course there is a chance that you will come through fine, and the machine will run happily but this is a rare case.

By upgrade I am referring to an "over the top of your current setup" installation of a newer OS

Here's the scoop.....Upgrade by all means. If the upgrade doesn't work you can always do a clean install. The key to successful upgrades has more to do with preparation than anything else.

Here are some tips that I've found useful.
1) Always Backup important data first. Remember that you are changing an operating system and not just updating an application!!!!
2) Do not expect that upgrading will fix a host of problems. If the computer is not responding well under its current OS then upgrading is not necessarily going to help.
3) Check your hardware to ensure you have drivers for the new OS saved to CD or floppy. This is critical for modem drivers as you need to be able to get online as soon as possible after the upgrade.
4) Do a thorough Disk Cleanup by removing your antivirus and any third party disk management programs you may have installed
5) If you've upgraded IE/OE beyond version 5.O then these must be uninstalled. IE 5.5 and higher won't survive the upgrade. Do not expect your e-mail, Address book and Favourites to survive the upgrade. BACKUP!
6) Dump Temp Folders including Temporary Internet Files and Cookies and clean out the Recycle Bin
7) Run Defrag. This is a very important step.
8) Do not upgrade with Windows 98 first edition. Use Windows 98 SE. It has a better chance of surviving the upgrade.
9) make sure you disable Virus Detection in the BIOS before you upgrade or you will get a SUWIN error.
10) Did you remember to Backup, get drivers, turn off antivirus, have your Product Key ready, pray?

The last time I did this all I did was to delete the 'win.com' file from the windows directory and reboot using my windows 95 disk. (one that allows cd support ) You use you win98 one - then just type @:/setup (@ being your cd drive ) and away you go. I found no probs doing this. Or is that too easy and I'm missing something ?